Mike McCudden, Head of Retail Derivatives at Interactive Investor (www.iii.co.uk), gives his thoughts on the trading week so far:
"Greece and Italy may not be governed by democracy at the moment, but the markets certainly are. Investors appear to be split, with some floating voters continuing to hold but the majority taking flight once again in continued fear of contagion in the Eurozone, pushing markets lower. Previous volumes, seen recently as banks last neared recent lows, appear to have dissipated.
"But the FTSE is still swinging like a pendulum through the 5500 mark throughout today, giving the impression that many investors are still optimistic a resolution to the Eurozone crisis is on the cards.
"The fear is that Eurozone contagion will happen - but it is happening. It's the threat of global contagion that's on the cards now.
"Credit markets are drying up as rising debt yields are spreading like cancer throughout Spain, Italy and Portugal, whose bond yields are hovering around the critical 7% mark. And continued pressure on the French may see its hallowed AAA rating under pressure.
"Substantial ECB intervention is needed in the bond markets as soon as possible to stem the rot, or it may be a case of too little too late. The Germans are holding back, repeating the same lines on hyperinflation and what happened with the Weimar Republic, but in reality that is highly unlikely.
"Centrally controlled fiscal policy may be the only answer to satisfy the markets, along with an EFSF on steroids if it is granted a banking license and the ability to leverage funds. Failure to act now is unthinkable."
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